Timber! After trillions of quantitative easing dollars, the U.S. (and global) economy continues to be weak. Investors looking to take advantage of a long-in-the-tooth bull market in August with the stock market running sideways should focus their attention on larger stocks with a long track record of providing investors with capital appreciation while steadily increasing their annual dividends.
The longer the track record, the more confidence you’ll have that the company will continue to perform well even when the broader economy isn’t. And, thanks to its size and global footprint, if its share price does get hit by in the near term, it has the ability to respond more quickly than lesser companies.
And that’s really important in this economic climate. U.S. second-quarter economic data is in and it’s not exactly heartwarming. After a dismal first quarter, where gross domestic product (GDP) groaned ahead 0.6%, second quarter GDP climbed at a modest 2.3% seasonally-adjusted annual rate. (Source: bea.gov, July 30, 2015.)
The bipolar U.S. economy has been following a familiar trajectory since the recession ended in 2009. The first quarter (blame the snow or strong U.S. dollar) is weak followed by a rebound in the spring and summer.
If the numbers are to be believed though, any hopes for an economic breakout remain elusive. Between 2012 and 2014, U.S. GDP increased at an annual rate of two percent. That’s a 0.3% downgrade from previous estimates.
In 2015, GDP has grown at an average annual rate of 1.5%. This compares with a slightly less ugly 1.9% rate in the same period last year. Will the U.S. economy pick up in the second half of the year? The Federal Reserve predicts the U.S. economy will grow at just 1.5% in 2015. So that’s mostly a no.
Investors worried that the Federal Reserve might start to raise its key lending rate later in the year, further hindering the U.S. economy, might want to watch the following dividend stocks in August.
Top 3 Dividend Stocks to Watch in August
Kellogg Company (NYSE/K)
This is probably not the first dividend stock investors think about. But they should. Kellogg Company (NYSE/K) has a long track record of providing investors with capital appreciation and annual dividend increases.
In fact, over the last 50 years, Kellogg’s has only skipped a dividend hike four times. It’s three percent annual dividend yield currently works out to $1.96 per share. The company has a history of raising its quarterly dividend in the third period of each fiscal year. (Source: Kelloggs.com, July 30, 2015.)
On July 24, Kellogg’s declared a dividend of $0.50 per share. The ex-dividend date is August 28, 2015 and is payable on September 15. This is the 363rd dividend that Kellogg’s has paid to owners of common stock since 1925. (Source: Kelloggs.com, July 30, 2015.)
Duke Energy Corporation (NYSE/DUK)
With 10-year Treasuries yielding about 2.3%, Duke Energy Corporation’s (NYSE/DUK) annual dividend of 4.50% looks pretty attractive. Lest we forget the company’s great long-term growth.
With an annual dividend of 4.5% or $3.30 per share, Duke Energy has paid a quarterly dividend for 88 consecutive years and raised its annual dividend for the last 10 years. It generally pays dividends on the 16th of March, June, September, and December to shareholders of record on the Friday closest to the 15th of February, May, August, and November.
Duke Energy will be announcing its financial results for the second quarter at 7:00 a.m. E.T. on Thursday, August 6th. All things being equal, the company will declare a second-quarter dividend payable to shareholders on September 16th with an ex-dividend date of Friday, August 14th.
Waste Management, Inc. (NYSE/WM)
Waste Management, Inc. (NYSE/WM) is the largest provider of waste management services (recycling facilities, transfer stations, and landfills) in North America.
With a market cap of $23.1 billion, Waste Management has provided a dividend for the last 53 quarters and has raised its annual dividend for each of the last 12 years. The company currently provides an annual dividend of 3.04% or $1.54 per share. (Source: wm.com, July 30, 2015.)
In the second quarter, Waste Management repurchased $300 million of its outstanding shares and returned $175 million to shareholders in the form of cash dividends. If history is any indicator, Waste Management will announce a quarterly cash dividend later in August with an ex-dividend date of September 4th. (Source: wm.com, July 30, 2015.)